Welsh government vetting in spotlight after dairy firm collapses

Dairy insiders have questioned the Welsh government’s vetting processes for investment in the sector, after Mona Island Dairy collapsed into administration.

This is the third processor which has received public funding and then gone bust.

Collectively, almost £10m of taxpayers’ cash has been invested in three businesses which have failed – GRH Food Company, Tomlinson’s Dairies and now Mona Island Dairy.

A representative for Mona Island’s suppliers has estimated they are collectively owed about £2m – almost double the £1.2m estimate from Mona Island itself.

See also: Anglesey-based dairy plant falls into administration

Some individual producers are understood to be out of pocket to the tune of £85,000.

‘Devastating’ for suppliers

Victoria Greaves, a spokesperson for the suppliers, told Farmers Weekly the impact on those affected had been “devastating”.

“So many of the farmers are at risk of losing their homes or their farms and talking to me about their mental health being severely impacted by the stress,” she said.

“Some are struggling to pay the feed bills for their for their animals, struggling to pay the vets bills or struggling to pay their rent.”

When Mona Island Dairy went into administration, its suppliers were assured by the company that they would be paid for milk collected by an alternative buyer – Meadow Foods.

But on 30 May, Meadow Foods held a meeting with farmers, where they were informed that as a “good will gesture”, they would pay farmers spot price directly for the milk they had collected that week if they signed a contract with Meadow Foods.

According to Ms Greaves, some farmers felt that given the debt owed to them and the impact this was having on their business and them personally, they had no choice but to sign a contract with Meadow Foods.

“The treatment farmers have received from Meadow Foods has shown the total lack of respect farmers are treated with,” she added. 

A spokesperson for Meadow Foods said: “Meadow worked to support Mona Dairy’s producers by offering a sustainable solution for their milk supply during this difficult time.

“Meadow was contractually obligated to purchase and pay Mona Dairy for the milk received from them. We invited producers to meet with us to discuss long or short-term options that would allow us to directly purchase their milk moving forward. 

“Representatives from both the Farmers’ Union of Wales and NFU Cymru also attended this meeting, and we have maintained open communications with them (including the NFU’s dairy team).

“We understand producer frustrations, but we are bound by our contractual obligations.” 

Rescue plan

Ronald Akkerman, co-founder and chief executive of Mona Island Dairy, said the founders are working with interested parties to prepare a rescue plan.

“The sooner we get a deal done [for new owners to buy the assets from the administrators], the sooner we will be able to offer clarity to farmers,” he said.

“Our aim is to find a solution [new ownership] that will include an offer to farmers for full settlement, conditions to be confirmed.”

The Welsh government defended its record on investment in the dairy sector, insisting all grant applications “are subject to appropriate due diligence checks”.

A spokesperson said: “We have invested and supported all aspects of the dairy sector, liquid milk, cheese and yoghurt, and consider applications that add value to milk produced on farm in Wales. 

“It is essential to maintain and develop a thriving and sustainable agricultural sector in Wales.”